It’s the broken record that just won’t stop – espousing the evils of spreadsheets and why supply chains should abandon them. But here is the reality, many organizations rely on Excel spreadsheets for two main reasons. First, change is hard. Spreadsheets are familiar and they’ve worked, sort of. Second, to supplement their demand planning process because the tools they have in place can’t reliably solve their challenges. So, knowing these two reasons, why do we keep banging the drum against spreadsheets?
Simple: One cannot scale the business with the precisions and agility needed today on spreadsheets. The business world moves fast and disruptions continue to challenge the supply chain. Traditional tools like spreadsheets, ERP and homegrown systems aren’t equipped to handle real-time challenges and deliver the flexibility and intelligence required to handle increased complexity.
Spreadsheets have become a bottleneck for many companies as they strive to keep pace with accelerated changes in the marketplace. For many, this legacy technology has created barriers to communication and collaboration and resulted in silos, disconnected decision-making and slow reactions to market changes.
Let’s take a look specifically at demand planning and the journey to a more mature, intelligent approach to forecasting demand. We’re at a critical moment, many might say we’ve past it, for demand planners to break free from spreadsheets to foster agility, collaboration and alignment throughout the supply chain.
Demand Planning in a Fast-changing Marketplace.
As a critical component of supply chain planning, demand planning is a complicated and nuanced process. A plethora of factors come into play in demand planning to effectively anticipate and meet the needs of customers and ensure companies are in the best possible position to deliver a given product or service when, where and how it’s required.
Across industries and across the world demand has become more volatile and complex, impacting key areas of the supply chain – from raw materials to finished and semi-finished goods planning. Consumer behaviors shift as new channels are opened, in addition to more demand signals, shorter product cycles, and increased uncertainty in the geopolitical and economic landscape. Demand planners must be able to monitor trends and shifts to generate accurate forecasts. And they also must communicate with key stakeholders across the supply chain network to ensure efficient alignment of supply and demand.
All these factors point to a critical need to move beyond systems with limited breadth and depth that can only support basic demand modeling and forecasting – and embrace more advanced tools and capabilities to allow for an effective and integrated demand plan that aligns with more areas across the business.
The challenge of establishing an accurate baseline forecast and collaborating with key stakeholders becomes greater as the business grows. This happened to Method Home, where the planners and the sales team used Excel spreadsheets to collect and analyze information. As the company grew, Method Home recognized the need to change this inefficient and time-consuming planning process and adopt a more advanced and integrated system for long-term success. Within a few months, the company fully implemented a supply chain planning solution which increased visibility across all parties involved in the forecasting process. Method Home increased forecast accuracy across all products, where the top-30 SKUs alone improved by 5%, in addition to reducing its inventory investment by 23.5% and maintaining service level goals of a 98% fill rate and 98% on-time delivery.
4 Reasons To Ditch the Spreadsheets
A more advanced approach to demand modeling and forecasting is essential in today’s highly challenging and disruptive environment. Here are just a few of the reasons why it’s so important to ditch those spreadsheets and embrace demand planning software:
1. Risks to Data Accuracy
Spreadsheets have some automation, which is good. However, they rely heavily on manual tasks to manipulate the data, which means they are prone to errors, including incorrect formulas or entry errors that affect the accuracy of demand forecasting. Also, demand forecasting entails gathering data from other sources, which is an incredibly time-consuming process to perform in spreadsheets. This leads to many organizations limiting the breadth of the data they use to influence the forecast.
Demand planning software can typically integrate, validate and ensure data accuracy and consistency, not to mention enable the use of structured and unstructured data from both internal and external sources. Generating greater insights from this data allows you to forecast with confidence.
2. Scalability to Support Business Growth
Another issue with spreadsheets is that they easily become unwieldly and complicated to manage. Organizations today are amassing a lot of diverse data which needs to be cleansed and analyzed – and as the volume of data grows, the process of managing all the information becomes increasingly complex. You need a demand planning system that is designed to handle large amounts of data to keep the process not only manageable but scalable in order to support business growth.
3. Cross-functional Collaboration
Spreadsheets are typically used by individuals and although they can be shared, different departments or teams can create multiple versions of a document, leading to inconsistency and duplicated data. This creates a barrier for effective team collaboration and data-sharing across the business, which is key as you progress in your supply chain planning maturity.
When you switch to an integrated demand planning solution, you can make the most of the software’s features for consensus demand plans based on enhanced collaboration and establish a shared end-to-end view across key stakeholders including marketing, sales, suppliers, and financial teams.
The manual processes involved in upkeeping spreadsheets are not only time-consuming but prone to errors, posing risks to your planning. Using automation capabilities in demand planning software allows you to automate tasks such as cleansing, analyzing and synchronizing data - reducing the risk of errors and freeing up time for more strategic activities.
As you automate routine tasks with a demand planning solution and reach more advanced stages of planning maturity, you can harness automation and forecasting with advanced analytics and AI/Machine Learning. Applying AI to demand planning frees up resources and elevates the use of data with actionable insights for better decision-making. These capabilities are also critical to create predictive and prescriptive forecasts and using what-if scenarios and probabilistic planning.
Are Spreadsheets Holding You Back?
To handle today’s increased complexity and make the most of new market opportunities, companies need to increase their ability to sense, analyze and shape demand. We’ve mentioned here only 4 of the many reasons why it’s so critical that companies ditch spreadsheets and level up from foundational tools to advanced demand planning capabilities to keep pace in today’s fast-changing environment, to derive greater value from data and to model demand and forecast with greater accuracy.
Demand planning software helps to break down silos, automate processes and improve data accuracy, thus enabling more informed decisions and faster responses to market changes.
You can use this guide to help you assess where you are now in your maturity journey and explore key steps to take your demand planning to the next level.
Ready for the next step? Let us show you how you can evolve and accelerate your demand planning with our market-leading Atlas Planning Platform to reduce risk, empower decision-making and maximize opportunities.